Question 1187667
If the useful life of the equipment is 5 years, the equipment would have depreciated by 5,000,000  -  1,000,000 = 4,000,000 in currency within that period.


To do sum-of-years digits depreciation, add the ‘digits’ in its useful life:  1 + 2 + 3 + 4 + 5 = 15.  


The amount of annual depreciation is then computed as follows --


1st year: (5/15)×4,000,000=1,333,333.33
2nd year: (4/15)×4,000,000=1,066,666.67
3rd year: (3/15)×4,000,000=800,000
4th year: (2/15)×4,000,000=533,333.33
5th year: (1/15)×4,000,000=266,666.67


Therefore the book value of the equipment after 3 years is 5,000,000  -  (1,333,333.33+ 1,066,666.67+ 800,000)= 1,800,000.


***The sum-of-years digits method is a standard procedure in depreciating the value of an asset, 
and  most of the depreciation associated with it is recognized in the first few years of its useful life.